The Dow Jones Industrial Average (DJIA) is a widely recognized name in finance. Following his nineteenth-century roots in publishing, Charles Dow's first stock averages creation included nine railroads and two industrials. Today, the DJIA is an index of 30 companies. While exploring the history and components of the DJIA, specifications will refer to the futures contract traded on the CME.
$10 x DJIA ($10) futures price
Minimum fluctuation is 1.00 index points=$10
March, June, September, December
Trades open outcry and Globex (electronic) per the following schedule:
Electronic: Mon -Thurs: 3:30 p.m.-8:15 a.m. (daily maintenance shutdown from 4:30 p.m.-5:00 p.m.) Sun: 5:00 p.m.-8:15 a.m. Central Time
Open Auction: Mon-Fri: 8:30 a.m. -3:15 p.m. Central Time
RTH: Successive 10%, 20%, 30% limits (downside only)
ETH (overnight): 5% up or down
Please consult exchange for additional details on limits.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
***chart courtesy Gecko Software
The DJIA is a widely recognized stock market index and was named for Charles Dow and one of his associates, Edward Jones. In the company's overview, it indicates that the DJIA serves "to provide a clear, straightforward view of the stock market and, by extension, the U.S. economy" as the thirty component companies represent a diverse group. The current components and their weights are:
On June of 2009, Cisco and Travelers replaced Citigroup and General Motors. Changes have been made historically most often due to mergers. Another reason for changes is th shifts in technologies over time. Although the term "industrial" contributes to the name, the DJIA is meant to represent the broad market. Former components include Goodyear,Sears Roebuck & Co, Bethlehem Steel, Woolworth, Eastman Kodak, Honeywell, and many other recognizable names.
Calculating the index involves totaling the component stocks' prices. The divisor for the average is not straightforward since it has to be adjusted to accommodate stock splits or other fundamental changes. This helps maintain continuity. The DJIA is often the subjec of criticism since it is price-weighted and not all the components may be open for trading at the same time.
The worst and best days according to the DJIA website were as follows:
For the futures contract on the DJIA, the commonly watched factors which may affect trade include economic reports or events. This may include the following:
Retail Sales
Unemployment Claims
Personal Income
PPI
CPI
New Home Sales
FOMC Meetings & Member commentaries
In addition to weekly and monthly reports, corporate earnings and activities such as mergers and acquisitions may affect price and volatility. There are nearly countless national and global events that can be considered in relation to how they may affect member shares and the overall index value.
Disclaimer: There is a substantial risk of loss in futures trading and it is not suitable for all investors. Past results are by no means indicative of potential future returns. Fundamental factors, seasonal and weather trends, and current events may have already been factored into the markets.
Copyright: Any copy, reprint, broadcast, or distribution of this report of any kind is prohibited without the expressed written consent of Futures Press, Inc.
As a benchmark index, the DJIA can be used by fund managers, speculators, analysts and rating companies as a performance standard against which they can compare their own performance or the performance of others. The DJIA futures contract has also been used to accommodate a range of both speculator and hedger trading strategies.